COVID-19: Because of the coronavirus situation, can I make my staff redundant?

If you are in the regrettable position intending to close your business because of the coronavirus, this is certainly a redundancy situation. Even if you intend to re-open the business once the situation improves, this remains a redundancy case, especially so given the expected length of the coronavirus disruptions.

If you are closing a part of your business or some of your offices, then you are making redundant jobs in those offices or in that part of your business.

If you are responding to a drop in your customer orders and need to reduce your staff for that reason, it is also a redundancy situation. It will also be a redundancy if you are reasonably anticipating that you will not require so many employees in the near future and will have to introduce cuts.

Remember that in any situation you are making redundant the job roles, not the individual people. This means that all employees performing particular job roles will have to be put in a redundancy pool if you making some but not all of them redundant, and the individuals will have to be selected for redundancy based on the objective and reasonable selection criteria you will have to apply. The selection pool obviously will not be required if you have just one individual performing a particular job, say one manager, or you are closing down your business.

Assuming that the redundancy is not large scale, that is fewer than 20 employees will lose their jobs within 90 days, the essential procedure is:

  • consult with employees
  • select employees for redundancy
  • give notice
  • work out redundancy pay

The employer is expected to explore all options to avert the redundancies, and to continue to do so at every step of the redundancy process. ACAS emphasises this requirement in its guide, which can be accessed online:

Avoiding the redundancies is also the main point of the consultation process. The employer is required to look into any alternatives. Admittedly such alternatives will be extremely limited in the current situation, but the present crisis will very unlikely be an excuse acceptable to the Employment Tribunal for flouting the consultation requirement. The employer is also expected to encourage all staff whose jobs are identified as at risk of redundancy to put forward any proposals they may have for saving the jobs. The consultation is also to keep the employees at risk informed and supported throughout the redundancy process.

The redundancy may be a quite an expensive option. Your employees with two years of service or more will be entitled to the statutory redundancy pay as follows:

  • 1/2 week’s pay for each full year of service for employees under 22 years of age;
  • 1 week’s pay for each full year you for employees 22 or older, but under 41;
  • 1 and 1/2 week’s pay for each full year for employees 41 or older

Length of service is capped at 20 years. The weekly pay is currently capped at £525 and the maximum statutory redundancy pay is currently £15,750. Your employment contract or policies may specify a higher redundancy pay. Redundancy pay under £30,000 is not taxable.

In the current situation timing is crucial. The employers may have to streamline some of the process. Lawgistics is here to advise you on the risks involved and to guide you through the procedure. It is generally true that the employees can bring a claim to the Employment Tribunal if they have accumulated 2 years of continuous service. There are however a number of important exceptions where the employee can bring a claim regardless of the length of service, for example, claims of discriminatory redundancy. It is also true that an employee has 3 months from the termination of employment to complain to the Employment Tribunal, but it should be fully expected that out of time claims will be allowed in view of the coronavirus crisis.


Authors: Kiril Moskovchuk

Published: 19 Mar 2020


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